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Author Question: The Costs of InflationIf you want to make a 11% real return on a loan that you are planning to make ... (Read 54 times)

april 19

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on: Nov 23, 2022

Question 1

Using Price Indexes to Correct for Inflation



Year		Nominal Average Hourly Earnings
CPI
       1$12​100
       213​107​
       318​113​

Based on the data in the table, the rate of growth of the average price level from Year 2 to Year 3 is ________. (Round to the nearest tenth when appropriate.)
◦ 38.5%
◦ 5.3%
◦ 5.6%
◦ 10.6%

Question 2

The Costs of Inflation

If you want to make a 11% real return on a loan that you are planning to make and the expected inflation rate during the period of the loan is 6%, then you should charge a nominal interest rate of ________.
◦ -5%
◦ 11%
◦ 17%
◦ 5%
Macroeconomics ¦ Acemoglu, Laibson, List ¦ 3rd Edition
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Marked as best answer by april 19 on Nov 23, 2022

Marys

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Reply #1 on: Nov 23, 2022
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april 19

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Reply 2 on: Nov 23, 2022
Great answer, keep it coming :)

cassie_ragen

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Reply 3 on: Yesterday
Wow, this really help

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